Business

PARIS — What was initially downplayed as a brief hiccup in the supply of semiconductors looks more and more like a shortage that may last throughout the year in what would be a big blow to automakers.

They were planning to rev up production this year to meet an expected surge in demand from consumers as the pandemic wanes and to recover from last year's losses. But without enough chips those hopes are fading.

Stop and go manufacturing 

The shortage of chips has pushed automakers to idle production lines for brief periods when they temporarily run out of supplies. 

Toyota, Volkswagen, Ford, Peugeot, Fiat, Jeep, Honda, Jaguar Land Rover and even the Chinese startup Nio have had to pause production in their factories in the past months.

Automakers have reduced the stocks of parts they keep on hand in recent years as part of cost-cutting measures, so delivery delays can quickly force an entire shutdown. 

Renault CEO Luca de Meo told shareholders this past week that "the semiconductor shortage could cause a drop in production volume this year of at least 100,000 vehicles".

In Germany, thousands of autoworkers were on reduced work hours or temporary unemployment as Volkswagen and Mercedes factories were forced to halt production.

Fiat slowed production at its Brazilian factory in Betim for the second time this month.

The Stellantis factory in Rennes-La Janais in France, where 2,000 people work, was also nearly idle.

Essential chips 

Computer processors are a key element in today's vehicles, which can easily have several dozen to control elements such as the engine, automatic braking system, airbags, automatic parking system and the infotainment system. 

The main manufacturers are located in Asia, such as TSMC in Taiwan and Samsung and SK Hynix in South Korea, although there are still some factories in the United States and Europe.

The surge in demand for electronic devices during the pandemic is the main cause of today's shortage of chips.

A fire in a Japanese factory did not help and now a drought in Taiwan may force a reduction in output.

Automakers adapt 

Automakers say they are managing the situation on a day by day basis and are trying to avoid shutting down production lines completely.

Due to the chip shortage, "GM is building some vehicles without certain modules when necessary," the US carmaker said in a statement. 

"They will be completed as soon as more semiconductors become available", it added. 

Stellantis was able to resume production of the new Peugeot 308 at half the normal pace after a three-week halt. It went back to a dashboard console that uses an analogue speedometer. 

Most automakers say they hope to make up lost production during the second half of the year.

Current shortages of semiconductor chips that are slowing car production worldwide "can be compensated for by the end of the year", Daimler CEO Ola Kallenius said in a statement.

End of the tunnel? 

Others are more pessimistic.

"An improvement in the short term is not to be expected" said Volkmar Denner, the CEO of Bosch, which is a major supplier of components for automakers.

"Our entire industry will probably be confronted by this unsatisfactory situation for months to come," he added.

French auto component maker Faurecia does not expect an improvement before the very end of the year as the consumer electronics industry is gearing up for its peak manufacturing period.

"The third quarter is very important for manufacturing goods for Christmas. We can be more optimistic for the fourth quarter," said the company's CEO, Patrick Koller.

According to Iris Pang, a specialist on the Taiwanese economy at ING, the chip shortage risks lasting into next year or even 2023. The drought has prompted authorities to order firms in areas where chip factories are located to reduce water usage.

"This has started to make semiconductor factories nervous when they have more semiconductor orders," she said.

BEIRUT — A Lebanon-made electric car made its debut on Saturday, the first time the Mediterranean country has manufactured an automobile, despite struggling amid a dire economic crisis with frequent power cuts.

The red sports car with butterfly doors — named "Quds Rise", using the Arabic name of Jerusalem — is the project of Lebanese-born Palestinian businessman Jihad Mohammad.

It is the "first automobile to be made locally", Mohammad told reporters, at the unveiling in a parking lot south of Beirut.

It was built in Lebanon "from start to finish", he said of the prototype, emblazoned at the front with a golden logo of the Dome of the Rock, the shrine in Jerusalem's Al Aqsa Mosque compound, Islam's third holiest site.

The car is to cost $30,000.

Production of up to 10,000 vehicles is hoped to start later this year in Lebanon, with cars to hit the market in a year's time, said Mohammad, the director of Lebanon-based firm EV Electra.

Mohammad, 50, said he set up the company four years ago after years abroad, employing Lebanese and Palestinian engineers among 300 members of staff.

He says his long-term goal is to compete on the international market for hybrid and electric cars, as well as to make sales in Lebanon.

But the unveiling comes as Lebanon struggles amid its worst economic crisis in decades, and imported car sales are at a record low, in part due to capital controls and drastic devaluation on the black market.

Mohammad said potential Lebanese buyers would be offered the opportunity to pay for half the new electric car in dollars, with the rest paid in Lebanese pounds at an exchange rate better than the black market one, to be paid over five years without interest.

The economic crunch since late 2019 has plunged more than half the population into poverty.

Lebanon also relies on fossil fuels for power generation, already insufficient for a population of around 6 million who suffer daily power cuts.

To power its new electric cars, the firm plans to set up around 100 recharging stations across the country connected to generators.

These could then be fuelled by solar and wind power generation, Mohammed said.

FRANKFURT — The European Central Bank (ECB) on Thursday kept its massive pandemic-fighting stimulus package in place, in a bid to help Europe's ailing economies overcome the devastating impact of the coronavirus crisis.

After calming jittery markets last month by promising to "significantly" step up the pace of its pandemic emergency bond purchases, the ECB's governing council said such buys will keep going at the same accelerated rate.

ECB President Christine Lagarde, is likely to use her press conference to reiterate the message that there will be no premature end to "favourable financing conditions" until the crisis is deemed over and the rebound is firmly on track.

The Frankfurt institution on Thursday held interest rates at historic lows, including a deposit rate of -0.5 per cent -- meaning banks pay to store excess cash with the ECB.

The ECB's 1.85 trillion euro ($2.2 trillion) pandemic emergency bond purchasing programme (PEPP), set to run until March 2022, was also kept intact, although the council stressed it stood ready to "adjust all of its instruments, as appropriate", should it become necessary.

The goal of the ECB's measures, which also include super cheap loans for banks, is to keep borrowing costs low to encourage spending and investment in the 19-nation currency club in order to drive up growth and inflation.

Lagarde may also repeat her plea for eurozone governments to share the load through fiscal stimulus.

Those efforts were given a boost when a top German court on Wednesday threw out a legal challenge against the European Union's 750-billion-euro recovery fund, paving the way for its ratification.

Lagarde has frequently called for the landmark fund to be implemented, saying it has a "key role" to play in nursing the region back to health.

Looking past inflation 

The former French finance minister and ex-head of the International Monetary Fund can also expect to be quizzed about the future pace of asset purchases.

Following last month's pledge to accelerate debt purchases in response to rising bond yields, the ECB's weekly PEPP purchases have averaged 17 billion euros, compared to around 12 billion in January and February.

While investors are keen for any insight into the future rhythm of the purchases and how the ECB plans to eventually wind down the scheme, observers believe Lagarde will keep her cards close to her chest.

"Silence is golden," said ING bank economist Carsten Brzeski, adding that the next meeting on June 10 should bring more clarity, when the ECB unveils new growth and inflation forecasts.

In quarterly projections published in March, the ECB surprised observers by slightly raising its 2021 growth forecast from 3.9 to 4.0 per cent, fuelled by optimism about Europe's Covid-19 vaccine rollout and the global economic rebound.

While the speed of inoculations has picked up across the bloc in recent weeks after a bumpy start, many countries are battling the spread of more contagious virus variants, including strains first detected in Britain and South Africa.

Top eurozone economies Germany, France and Spain are among those that have extended or reimposed shutdowns and travel curbs to rein in Covid cases, weighing on second-quarter growth prospects.

"In June, the ECB and markets will have a much better idea about the severity of the current wave of infections and restrictions as well as the progress of the vaccination campaign and its impact on the economic outlook," said Schmieding.

Eurozone inflation, meanwhile, continued its upward trend and climbed to 1.3 per cent in March, powered in part by higher energy prices.

Economists see inflation bounding even higher in the months ahead, possibly exceeding the ECB's long-out-of-reach inflation target of "close to, but below" 2.0 per cent.

Lagarde, however, stressed in March that price growth is being driven by "temporary factors" linked to the pandemic, such as pent-up consumer demand as virus curbs are relaxed.

The ECB "will see through that", she said, and stick with its ultra-loose monetary policy so long as underlying inflation remains weak.

NEW YORK — Chevron and Toyota announced on Wednesday a first step towards a strategic alliance to commercialise hydrogen, which is seen as an environmentally-friendly transportation fuel option.

The alliance, which is centered on the United States, is expected to focus on three areas: collaborating on public policy to promote hydrogen infrastructure, assessing the market for fuel cell electric vehicles and the hydrogen supply that will be needed, and exploring opportunities to jointly research and develop hydrogen powered transportation and storage.

The venture aims "to advance a functional, thriving global hydrogen economy," the companies said in a joint press release.

The memorandum of understanding announced Wednesday is non-binding, but "lays out the path to a formalised strategic alliance by early third quarter 2021," a Chevron spokesman said in an email.

At this week's Shanghai motor show, Toyota unveiled plans for its first global line-up of battery electric vehicles, including an SUV expected to reach consumers in just over a year.

Chevron has faced pressure from environmentalists to match commitments by European oil giants like Royal Dutch Shell and Total, which have set targets to reach net-zero carbon emissions.

Chevron said it has no plans to shutter its gas stations.

"Fuels have and will continue to change over time and offering hydrogen at retail sites is a continuation of that change," a Chevron spokesman said.

"Ultimately, consumer preferences help drive the offerings at Chevron-branded retail fuel stations; however, we anticipate that gasoline and diesel will continue to be important offerings that consumers will require. We are committed to the Chevron and Texaco brands, and reliably supplying gasoline and other fuels to our loyal customer base."

At its annual meeting in May, Chevron is expected to battle against a number of shareholder proposals that require specific actions on climate change as well as a measure requiring more disclosure about the company's lobbying activities.

BEIJING — Handlebars tight in snaking rows of colour, thousands of abandoned bicycles line an open field outside the city of Shenyang, relics of a shared bike mania that has overwhelmed China's cities.

The turquoise, blue and yellow bicycles, arranged in long lines, some piled on top of each other, bear the logos of the companies that dominate China's bike-sharing sector — Hellobike, Didi and Meituan.

Low cost-shared bikes, which users can unlock using apps and park virtually anywhere, burst onto Chinese streets in the middle of the last decade with investors rushing to fund bike startups like the now-defunct Ofo and Mobike.

But the two-wheelers soon took over pavements and spilled over into bike lanes and streets, parked haphazardly by users who sometimes simply tossed the bikes into shrubbery, creating a headache for urban authorities and pedestrians.

Many bikes suffered damage or were stolen, while some were even repurposed into makeshift barricades when COVID-19 broke out last year.

The problem is a familiar one to cities around the world battling to round up stray bikes, from metro stations in Washington DC to the bottom of Melbourne's river.

Aerial photographs from the suburbs of Shenyang, Liaoning province, show a bicycle graveyard, one of many which began appearing as early as 2018 as tech start-up darling Ofo imploded, defaulting on debts as its users claimed back rental deposits.

Mountains of damaged bikes belonging to other companies have also been discarded rather than repaired, in contrast to the "green" image usually associated with urban cycling.

The bikes now jostle for space on Chinese streets with hordes of shared electronic scooters, which have also made their appearance elsewhere in the world including Paris and California.

Chinese cities have vowed to curb the chaotic fleets of bikes, with Beijing saying it will remove 44,000 bikes from the city centre this year in order to cap bike numbers at under 800,000, according to state media.